Nova Scotia jury awards worker 48 months in Wallace damages

Eye-popping decision is being appealed by the employer and likely won't stand

09/22/2005|employmentlawtoday.com

A Nova Scotia jury has awarded a worker 48 months’ pay in

Wallace

damages for the way CHC Helicopters terminated her employment.

But the decision is being appealed and in all likelihood won’t stand, according to Grant Machum, a senior partner with the law firm of Stewart McKelvey Stirling Scales in Halifax.

The case

Wendy Jessen was seeking damages for wrongful dismissal. She was also looking for general damages along with aggravated and punitive damages. But the court dismissed Jessen’s claim for aggravated and punitive damages, leaving the issue of reasonable notice to the jury.

After deliberating, the jury rendered its decision. Jessen was awarded four months’ pay in lieu of notice plus an additional 48 months’ extended notice due to the manner of dismissal based on the

Wallace

factors. (For more information on

Wallace

damages, see below.)

CHC Helicopters has appealed the decision to the Nova Scotia Court of Appeal on the grounds the award of 48 months’ extended notice is so inordinately high it is a wholly erroneous estimate of the damages suffered by Jessen.

Mitigation and Wallace damages

One of the more interesting parts of the case, from an employer’s perspective, was how the court ruled on Sept. 8 in regards to whether the employee had a duty to mitigate her damages during the extended notice period.

The Nova Scotia Supreme Court ruled the employee has a duty to mitigate her damages during the notice period and during the extended

Wallace

notice period.

“Any extension to the period of reasonable notice arising out of the bad faith conduct of the employer at the time of dismissal is not a separate head of damages that would be subject to new or different rules regarding mitigation,” the court said. “As such, (Jessen) is required to mitigate her damages throughout the notice period of reasonable notice which should include the additional notice period awarded by the jury.”

The court’s decision on this matter is inline with earlier decisions from other jurisdictions. In 1999, in

Y.S. v. H & R Property Management Ltd.

, an Ontario court said

Wallace

damages were subject to mitigation.

“Any additional amount in lieu of notice that might be mandated in those circumstances under the doctrine of

Wallace

would itself be subjected to capping by way of mitigation when a terminated employee obtains a new job at higher pay,” the Ontario court said. “The decision in

would thus be of no assistance to the (worker) in avoiding the mitigation effect of her subsequent long-term employment.”

Why the decision won’t stand

Machum said the awarding of 48 months’ in

Wallace

damages by the jury won’t stand.

“It’s being appealed right now,” he said. “I don’t think it’s going to change the law in the province. The upper end (for reasonable notice in Nova Scotia) still seems to be 24 months.”

He said the case is interesting in that it shows juries tend to award higher amounts than judges.

“But I don’t think our Court of Appeal is going to maintain that decision,” said Machum. “It seems excessive in the circumstances. We don’t consider it to be a significant case other than the fact it shows that juries don’t tolerate terminations of employees to the same extent judges do. Juries seem inclined to award higher damages.”

Machum said the jury in this case appears to have misunderstood the purpose of reasonable notice, which is not to penalize an employer for terminating an employee but to consider what would be a reasonable period of time had the parties put their minds to the issue at the time the employment relationship started.

What are Wallace damages?

In

Wallace v. United Grain Growers Ltd.

, a 1997 decision by the Supreme Court of Canada, the high court set a precedent that allowed courts to extend the reasonable notice period if the employer handled the termination in an insensitive or cruel manner.

Simply put, an employee who has been subjected to callous and insensitive treatment in the court of his dismissal is entitled to claim additional compensation in the form of an addition to the notice period.

Here’s what Justice Frank Iacobucci said in the

Wallace

decision:

“The point at which the employment relationship ruptures is the time when the employee is most vulnerable and hence, most in need of protection. In recognition of this need, the law ought to encourage conduct that minimizes the damage and dislocation (both economic and personal) that result from dismissal.”

He went on to say:

“The loss of one’s job is always a traumatic event. However, when termination is accompanied by acts of bad faith in the manner of discharge, the results can be especially devastating. In my opinion, to ensure that employees receive adequate protection, employers ought to be held to an obligation of good faith and fair dealing in the manner of dismissal, the breach of which will be compensated for by adding to the length of the notice period.”